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Office to residential permitted development rights - help for housing or jeopardy for jobs?

Last year the government introduced new permitted development ("PD") rights which, in certain circumstances, allow the conversion of offices to residential dwellings without planning permission. The rights were expressed to be temporary, lasting for three years.

The government heralded the changes as necessary to bring underused offices back into effective use as much needed new housing. However, recent events have signalled a growing conflict between the government's desire to tackle the national housing crisis and the view of some local planning authorities ("LPAs") that the resulting loss of office space will damage the local economy. That conflict is likely to be exacerbated by a recent consultation document that proposes to make the PD rights permanent.

Article 1(6A) Exemptions and Article 4 Directions

Prior to the introduction of the office to residential PD rights, the DCLG wrote to all chief planning officers alerting them of the forthcoming changes and informing them of an opportunity to seek an immediate exemption for specific parts of their localities (such areas now known as Article 1(6A) land). Exemptions would only be granted where the new PD rights would lead to the loss of a nationally significant area of economic activity or substantial adverse economic consequences that would not be offset by the positive benefits of the new rights. 165 LPAs applied for some level of exemption but just 17 were successful.

A number of councils have criticised the government's stance on this point, arguing that without adequate planning control over office conversions they risk losing employment space and jobs and have no way of ensuring that the new housing created is of adequate quality or accords with local affordability policy. The London Boroughs of Islington, Richmond, Lambeth and Camden all brought High Court challenges seeking to set aside the decisions to refuse their applications for exemptions. The claims failed, although Collins J did state in a combined judgment that he understood the Boroughs' concerns, describing the lack of any affordable housing requirements in respect of office conversions as "worrying".

Under Article 4 of the General Permitted Development Order, a LPA may make a direction that PD rights shall not apply in a specified area, effectively reactivating the need for planning permission. Following their failed High Court challenge, Islington LBC published a borough-wide Article 4 Direction, which was subsequently blocked by the government along with a similar Direction made by Broxbourne BC. The then Planning Minister Nick Boles issued a statement saying that both authorities had applied their Directions disproportionately, and requesting that they narrow them. Boles also accused a "small minority of town halls" of trying to undermine the PD rights reforms, blaming this attitude on an inability to "hit builders with state levies" and an "irrational objection to more private housing".

Islington recently published a revised Direction affecting a reduced area of the borough. In the latest development, this too was blocked on 10 July, on the basis that it remained unacceptably expansive and unjustified.

Prior approval refusals

Whilst the office conversion PD rights remove the need for planning permission, developers still need to apply to their LPA for a determination as to whether prior approval is needed on transport and highways impacts, contamination risks and flooding risks. The prior approval process thus allows LPAs to continue to exercise substantial control over office conversion proposals, and over 40 appeals have been lodged against decisions to refuse prior approval applications since the new rights came into force. Of those determined, 87% of the appeals have been allowed, adding weight to the argument that a minority of LPAs have an in principle objection to use of the PD rights.

Comment

It is evident that office conversion PD rights, whilst offering a valuable opportunity to tackle the country's housing shortage, have understandably sparked concern for some LPAs regarding the impact on their local economy and the inability to seek the usual section 106 contributions for such development. At the time of writing, Richmond LBC is looking to extend the ambit of its current Article 4 Direction, while some 20 prior approval appeals are awaiting determination. In light of the recent proposal to make the PD rights permanent, it will be interesting to monitor their ongoing impact and how LPAs continue in their approach to the inevitable rise in office conversion proposals.